Businesses brace for steel and aluminum tariffs, which double today

Washington Post

2 days ago

Tariffs on steel and aluminum are doubling to 50 percent Wednesday, adding higher costs and new uncertainty for businesses across the country that rely on metal imports for machinery, construction and manufacturing.
In the order doubling the tariffs, which said it would take effect at 12:01 a.m. Eastern time, President Donald Trump wrote that the higher levies 'will provide greater support to these industries and reduce or eliminate the national security threat posed by imports of steel and aluminum articles and their derivative articles.'
But for American companies that rely on specialized metals that aren't available domestically, the order set off a fresh scramble to raise prices and rethink hiring and investment.
'It's a big, eye-catching tariff: 50 percent is a high number,' said Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics. 'Aluminum goes into all kinds of products — aircrafts, autos, construction — and steel is used throughout the economy, so you're talking higher prices and lost jobs across the U.S. manufacturing industry.'
The ratcheting up of steel and aluminum tariffs is just the latest in a string of trade-related policies the Trump administration has delivered in rapid succession this year, in hopes of shoring up U.S. manufacturing. The administration has maintained that the 50 percent steel and aluminum tariffs in particular will spur more U.S. production and create jobs, while protecting national security.
'Nobody's going to be able to steal your industry,' Trump told steelworkers in Pennsylvania as he announced the new tariffs Friday. 'At 25 percent, they [foreign competitors] can sort of get over that fence. At 50 percent, they can no longer get over that fence.'
But U.S. manufacturers say the sudden onslaught of tariffs is making it harder to operate. Many rely on foreign sources of steel and aluminum to make their products and say it's been tough to find domestic suppliers.
For Independent Can, near Baltimore, the heightened tariffs will make it costlier to manufacture tins for infant formula, coffee, popcorn and dog treats at its plants in Maryland and Ohio. The company — which sells its packaging to food giants including Conagra Brands and Smuckers — has already raised prices this year to offset some of the 25 percent steel and aluminum tariffs that were announced in February.
Now, with import taxes rising to 50 percent, CEO Rick Huether says he'll have to pass on even more of those expenses.
'We've been telling customers: Here's our price, and here's our price with tariffs,' he said. 'We've absorbed a fair amount of these costs, but we can't absorb any more.'
Economists also caution that the fallout of higher tariffs could drag down other parts of the economy. Researchers found that Trump's 2018 round of 25 percent steel and aluminum tariffs helped add about 1,000 steel-production jobs but also contributed to the loss of 75,000 jobs in U.S. manufacturing.
The United States imports more steel than any other country, with 26.2 million metric tons of imports in 2024, according to the International Trade Administration. By comparison, the country exported less than one-third of that, or about 8 million metric tons of steel, that year. Canada is the top foreign supplier of steel to the United States, followed by Brazil and Mexico. While the U.S. imports far less steel from China, China dominates the global steel industry, influences prices worldwide and is a target of the tariffs.
'In our ideal scenario, we would have a fully U.S.-sourced supply chain, but we keep coming up empty,' said Danny Henn, vice president of operations at Heritage Steel, a company in Clarksville, Tennessee, that makes stainless steel cookware. 'There just aren't viable U.S. options.'
The auto industry, which has already been hard hit by Trump's tariffs, is likely to face even more dramatic cost increases in the coming weeks. Steel is a major component of cars, making up about 54 percent of the average vehicle, according to the American Iron and Steel Institute. Those higher costs are likely to be passed on to shoppers — resulting in markups of about $2,000 to $4,000 per new vehicle, according to estimates from Bill Hauk, an economics professor at the University of South Carolina.
'We're in uncharted territory — 50 percent across the board on steel and aluminum is huge — and it really puts automakers in a bind,' he said. 'We'll probably see slowdowns and perhaps layoffs in the auto industry if all of this goes through.'
Ford Motor CEO James Farley cautioned in February that new steel and aluminum tariffs would add 'cost and chaos' for U.S. automakers. Although Ford gets 90 percent of its steel from the United States, he noted that heightened tariffs would still have an effect. 'Our suppliers have international sources for aluminum, steel, so that price will come through,' he said. 'We'll have to deal with it.'
Independent Can, a 96-year-old family business, has had to delay upgrades to aging machinery. About 75 percent of its metal comes from abroad, in part because the small company is often up against much larger competitors for domestic deals. After years of trying, Huether finally secured a contract with U.S. Steel a few months ago for some of its needs.
'These tariffs have been very disruptive because we don't know from one day to the next what the heck is going on,' Huether said. 'We live and die on stability and predictability, and right now we have neither.'
David J. Lynch and Rachel Lerman contributed to this report.